Experimental Economist Vernon Smith on the Housing Bubble, Adam Smith, and Libertarianism

[rlichota1]

All good but the country music makes it less creadible. . Robert Lichota, an investoer of 20 years Robert Lihcota (Robert L, R Lichota)

[airforcemax]

I study issues to support. Anyone can join a nonviolent organization or form one to research and peacefully expose selfish, corrupt, toxic, and evil people and organizations.

Anyone can Google Max Rafael Waller o study my writings especially at Yahoo Answers.

Thank you

[bms2070]

@1Liberalis the blindness of orthodox economics to something as big as the GFC on the horizon demonstrated serious shortfalls in the neoclassical approach. A continuing adherence to now long falsified tenets of Chicago school economics demonstrates that mainstream economics is less a science, and much more a faith. And as a faith it is of course anxious about experimental approaches which might show up its weaknesses.

[bms2070]

@1Liberalis the blindness of orthodox economics to something as big as the GFC on the horizon demonstrates serious shortfalls in the neoclassical approach. The continuing adherence to now long falsified tenets of Chicago school economics demonstrates that mainstream economics is less a science, and more a faith.

[philbelanger2]

This was absolutely excellent.

[Vree0387]

FYI ReasonTV staff, that's a portrait of David Hume at the end there while your guest is talking about Adam Smith's book. It seems a bit out of place.

[rumco]

He doesn't know why people get caught up in expectation of rising price(s)? How about money printing - inflation?

Experimental economics is an oxymoron.

[TheBilliejones]

@rumco

I've participated in Vernon's experiments..........inflation is a non-factor in these experiments. The experiments are meant to show how people irrationally bid up asset prices despite fundamentals on a clear decline. You are right that inflation is a factor in real life, but most would argue that ridiculous growth assumptions are the real culprit in real life bubbles.......inflation takes a back seat.

[rumco]

@TheBilliejones But how does it happen that people assume that the price is going to go up, fast, and perhaps indefinitely and that it's possible to complete such project with resources available. For a global or macroeconomic bubble to occur, it has to be fueled by artificial credit/money expansion as any expectations of a higher price and resulting process of bidding up would be stopped by drying out of liquidity and higher interest rates.

[TheBilliejones]

@rumco

you are right that higher interest rates and the reduction of liquidity is used as a tool to dampen inflation, and you are also right that inflation often amplifies the magnitude of bubbles. It is wrong however, to assume that bubbles only occur as a result of inflation or "cheap money". I participated in Vernon's experiment a couple years ago so I don't remember all of the details, but if I'm not mistaken the "money supply" in the experiment was fixed.

[rumco]

@TheBilliejones Again, I do not claim that no bubble can occur without expanding credit/money supply. Sure if a small group of people bid up say a ticket for a gig to a ridiculous amount, one might call it a "bubble". But to explain market phenomena such as boom and boost, one has to look at the manipulation of the money supply and interest rates.

[TheBilliejones]

@rumco

Cont'd 2

The reason the bubble occurred was that people were essentially willing to play "who's the bigger fool" in which asset prices were bid up despite the fundamentals simply because a profit was made in the previous transaction ……despite the fundamentals. Basically, people who saw that the asset price no longer reflected the fundamentals and chose not to trade saw themselves losing out on the way up as the "fools" continued to trade back and forth and make money.

[TheBilliejones]

@rumco cont'd 3

The psychology is very similar to the recent GFC in which people saw there next door neighbors becoming millionaires flipping houses or investing in high growth penny stocks despite the fact that many people knew 40% YOY growth in residential real estate was unsustainable.

[rumco]

@TheBilliejones People knew that it might not last forever but they had access to 1.5% interest rate mortgage without putting anything down so they took the risk. Had the money supply was not expanded and interest rates suppressed, they would have no access to such artificial credit and bubble could not be formed.

[TheBilliejones]

@rumco

Yes, there is no doubt that the past real estate bubble was very much amplified by "cheap money", Not all bubbles are the result of cheap credit though. The famous tulip bubble in Holland for example was not the result of inflation, interest rates or easy credit terms......just a speculative bubble. Vernon's experiment is not based on the recent residential real estate bubble.....or any other historical bubble, its just an experiment to show how bubbles happen.

[MrConservative608]

I think he is right about inflating the dollar to resolve the debt. There is one other way to resolve the debt that will increase the amount of death threats to politicians if they do this solution. Leaving Social Security, Medicaid & Medicare at current levels, we would have to eliminate entire federal departments that don't do anything to cut more than $1 trillion from our annual budget because we need to spend less than money coming in to pay down debt. Almost impossible, right? LOL!

[rumco]

@MrConservative608 The debt should never be repaid. Government is a mafia, no one should be able to pay mafia's debts.

[z7349287]

Great interview. You guys put in david hume at the end though, not smith.

[pinegrove33]

what a good life he's led. the guy looks 20 years younger than he is. Great mind!

[RodCornholio]

Jeezus, this guy's in his 80's?! I know 50 year olds that look like him and aren't 1/100th as bright or articulate.

[ObjectivistAesthetic]

I admit that I am struggling to understand how his responses are answers to the questions.

[BobGeorgeAU]

Jesus this guy looks good for his age. When he said he remembered the 1930s like it was yesterday I thought he was kidding. Then he said he was 5 years old at the time. This man is 84! Forget what he knowns about economics. What does he know about health and aging that he's not telling us? He looks about 20 years younger than he is.

[CaptainLazerus]

I think the reason folks pass on when game theory says they won't is because they are not uncomfortable and we have an innate curiousity for the unknown. It may be that risking on the unknown may pay off later. If it doesn't - they are not uncomfortable. They'll try something else next time.

Likewise, having been given something lets us know that the person doing the giving can be hit up later for more. It behooves us to be an ideal recipient. Thus, basis of exchange is created.

[ssstealth]

Whoa, wait. Is my math right here? If he was five in 1932 then he's 84 years old now? I wouldn't have put him at much over 70!

[Kabukihomewood]

"If they had stopped the bubble in '03 or '04, It would have been a lot less damaging, but who woulda known that?" There you have it . . . the seen vs. the unseen.

[scalp340]

In short there were some great points in this, but for the most "experimental economics" is just a modified Keynes.

[scalp340]

@scalp340 let me rephrase, a watered down or "conservative" Keynesian economics.

[SuperSneakySteve]

I bet Thomas Sowell could kick this guys ass in a fight.

[RangerMcFriendlie]

@SuperSneakySteve

haha Thomas Sowell is great!

[johammbass]

Wtf? Peter Schiff didn't believe that real estate prices will keep rising. So please don't say "no one saw that the house prices will fall"

[starsassy]

The federal reserve is the culprit. Also, why isn't Carl Menger mentioned at all ??

[oilhammer04]

Smith sounds like Jimmy Stewart, but Smith is from Kansas and Stewart was from Pennsylvania. How did that happen?

[Gibbsian36]

@oilhammer04 Now that you mention it, he does sound just like Jimmy Stewart.

[sintruder]

If you eat in restaurants you can actually see a bubble once it's formed. Before the tech or housing bubbles burst I noticed when I was in restaurants that they were the topic of conversation for the common man just before the crash. It may sound crazy but when the market is booming you will notice it seems as if everyone you come in contact with is talking about it what ever it is.

[wye4379]

Particularly when he has been telling people for the last several years that the Fed is a net revenue positive for the federal government?  All this leads me to believe that if we get significant inflation it wold be a mistake on the Bernank's and the Federal Gov's part (not that I would put it past him to be that stupid).

I would be very interested to hear what Dr. Smith thinks on these points.

Cheers.

[wye4379]

Also, the Fed is one of the largest (3rd?) holders of Tresuries and any loss on that portfolio resulting from a rise in inflation expectations would go directly to their valuation. It has been estimated that the Fed has a DV01 on its bond portfolio of $1.5B and only $50Bish in "capital" (leverage ratio > 55:1) so it would likely be insolvent with a 0.33% rise in rates. Can you imagine the political fallout from the Bernank going to congress to ask for more money to recapitalize? CONT3

[wye4379]

So that holders don't have the opportunity to reset their yields quickly enough to adjust for inflation. I have heard NO-ONE adequately explain why the US government would try to inflate their way out of this given this term structure and the fact that many of its largest non-debt obligations are directly or implicitly inflation indexed (eg. medicare and soc.sec). In sum there is not enough (if any) benefit to be obtained by inflating for the US government. CONTINUED2

[wye4379]

Great interview. Here is the problem with the "inflate out of the debt" hypothesis. The term structure of US federal debt obligations is heavily weighted toward the shorter end of the yield curve. Generally if you are a government and want to maximize your "value" from inflation (ie, maximize the amount taken from bond holders) you want to have a term structure that is weighted toward the long (10s through 30s) end of the yield curve. CONTINUED

[adulby]

I underestimated Adam's interview skills. I also loved Vernon's "fundamental" and "property rights" monologue near the end.

[SuperDoctorprofessor]

@adulby Do you mean Nick's interviewing skills?

[adulby]

@SuperDoctorprofessor yepp. 

[solsega]

David Hume, not Adam Smith on that second picture.

[TruthAxe]

Marginalism is bunk. The Marginal Revolution is b.s. has held back economics. Prices are based on solely upon subjective belief on the whole of the thing. Fractional pieces and those on the margin don't count.

[djmclaughlin9999]

@TruthAxe , You might want to review a bit on the water-diamonds paradox. Marginalism and subjective value go hand-in-hand. Maginalism means "at the margin," the next unit available. It has nothing to do with fractional pieces. People have subjective valuations about the particular item or items in question, such as the next gallon of water or the next diamond purchased. They don't take all water or all diamonds into consideration for the decision, only their next, or marginal, unit.

[TruthAxe]

@djmclaughlin9999 What paradox? There is no paradox. Foolery arises when dummies try to compare unlike things, in this case, water and diamonds.

For all can imagine the sweat and toil that gold miners experience to pull forth an ounce of gold from deep within mountain sides, a great effort of man, machines and energy.

And all those can also imagine someone happy-go-lucky walking finding an ounce of gold near a riverbank.

Both ounces sell for the same price. So where's the paradox?

[TruthAxe]

@djmclaughlin9999 Value results from the expression of a ratio of importance between two commodities. When one of two things in exchange is money, we give 'value' another word. We call it 'price'.

The demand for a thing and the willingness to exchange to get it arises in the mind because of belief, that possession of a thing shall bring forth status or distraction.

[TruthAxe]

@djmclaughlin9999 And you and all the other marginalism fools have it oh-so-wrong. For all can imagine a man who has one house and one bed in which to sleep and another man who owns 10 houses with 20 beds in which to sleep.

Marginalism slaves believe that because a man can only sleep in one bed at a time, the first man is fully satisfied, his marginal utility, the highest.

Yet, the man with more houses and more beds is fully satisfied and suffers not diminishing utility .

[TruthAxe]

@djmclaughlin9999 And why is it the case? The rhetoric says the second guy's marginal utility is diminishing. Those fools who make that conclusion are wrong. Both men have DIFFERENT SCALES of satisfaction, regardless of whether houses and beds are both in question.

It is the mind alone where demand arises and from which through exchange, value arises. There is no paradox.

[djmclaughlin9999]

@TruthAxe It is true that both people have different scales of satisfaction, but those scales are not rigid, but rather always changing. And you are also right that there truly is not paradox, as there can be no paradoxes in reality. The paradox is the classical misunderstanding of value. Using diamonds and water, if you were standing beside a flowing stream of water and someone offered to give you a gallon of water for the diamond in your possession, you would almost certainly turn him down.

[djmclaughlin9999]

@TruthAxe Your marginal value for the next unit of water is very low because the stream makes it plentiful. But that doesn’t mean the value of all water is low. If, instead, you were in the middle of a desert, dying of thirst, and someone offered you a gallon of water for the diamond, you would be much more likely to take him up on it. Your subjective valuation of the marginal units of water and diamonds has changed dramatically.

[TruthAxe]

@djmclaughlin9999 Like everything else, water has exactly ZERO value until it gets traded. Value arises from exchange. It results from the expression of a ratio of importance between two commodities.

Precisely because men have different thoughts of worth, that exchange becomes possible and can confer profit on both parties involved in exchange.

Fools like Gossen, Jevons and Menger brought into economics the foolery of marginalism, which has caused more pernicious mischief than anything.

[TruthAxe]

@djmclaughlin9999 Fool economists who worship marginalism use the concept to justify all ways of property (right of ownership) theft. Typically, such economists claim that satisfaction comes from the first unit and that each subsequent unit must deliver less satisfaction, thus they're right to clamor for wealth redistribution.

That's politics cloaked in bogus economics reasoning.

There's no place for psychology in authentic economics.

[djmclaughlin9999]

@TruthAxe

So close and yet so far. I suppose there are economists who use marginal utility to justify theft of property. I can’t think of any. There are thousands of mainstream economist who have lost their way because they substitute mathematical formulas for economic reasoning. And there are thousands of mainstream economists who justify theft of property, often the same ones. The justification they use, however, has nothing to do with marginalism, but rather the hocus pocus of J.M. Keynes.

[djmclaughlin9999]

@TruthAxe That is the essence of economic decision making, whether or not money or goods or services, or even other people are involved. Price is the result of the interaction of the subjective valuations of many people. Those subjective valuations apply only to the relevant quantities in question, the marginal quantities, and not all quantities.

[TruthAxe]

@djmclaughlin9999 There is one true, great, invariant law for the whole of economics -- the Law of Prices. The Law of Prices holds that the winning bids of demand in the face of supply set the price. Price arises from the winning bidders buying WHOLE quantities only.

NO human says "I'm only going to buy 3 tomatoes and not 4 because half of the 4th tomato gives me less satisfaction than the first 1/8 of the 4th one."

Marginalism is total bullshit.

[djmclaughlin9999]

@TruthAxe The subjective valuation of some people for their marginal quantity is less than the price, thus, they don’t buy. Others value the good or service at a higher level than the price, thus they buy. The market price is not “the” price. It is merely the interactions of the marginal valuations of all buyers and all sellers at one particular point in time.

[TruthAxe]

@djmclaughlin9999 When persons deem the want to possess something is greater than its offering price, they buy it. It's that simple. The market price IS the price because the winning bidders make it so.

The price is the value because one of the two things in exchange is money. Had both things in the exchange been products delivering goods, say apples for oranges, we would say the value was so many apples for so many oranges.

Marginal valuation never happens because it doesn't exist.

[djmclaughlin9999]

@TruthAxe

Since your first comment on this thread said “Prices are based on solely upon subjective belief on the whole of the thing,” I assume that you subscribe to the subjective theory of value, that value is always the result of subjective value judgments of the actors in a market and is not something inherent in the object, as was so commonly believed several hundred years ago.

[TruthAxe]

@djmclaughlin9999 So you believe in intrinsic value? I've already schooled you that an ounce of gold mined through intense laborious effort and an ounce of gold found fetch the same price. And this happens because of the Law of Prices -- the winning bids of demand in the face of supply set the price.

[djmclaughlin9999]

@TruthAxe

An individual will only pay a money price for a good if he values the good or service more than the quantity of the commodity called money which is to be given in exchange for it.

As you said, there is a purchase and a sale, a buyer and a seller, in every transaction. Both buyer and the seller attach relative values to both the money and the item before the sale. The sale occurs only when the buyer and the seller have reciprocal subjective valuations of the money and the item.

[TruthAxe]

@djmclaughlin9999 Saying "money price" is redundant. Price is a word we give for value when one of two things in exchange is money.

Value means the ratio of the things exchanged. Value arises from exchange only. Buyers and sellers NEVER attach relative values. They offer and accept and thus exchange one thing for another.

The sale NEVER happens because of reciprocal subjective valuation. The sale happens because BOTH believe they're getting the better end of the deal.

[djmclaughlin9999]

@TruthAxe

If the sale takes place, it means that the buyer valued the item more than the money and that the seller valued the money more than the item. Economic theory and logic accept that as a fact, as a starting point, whereas psychology tries to determine why that is a fact.

The market price is not a single set price, but, rather, a tendency of the market toward an equilibrium between supply and demand. It is always in flux, changing with market conditions and the economic environment.

[djmclaughlin9999]

@TruthAxe

The law of demand is a true, great law for all of economics, that, everything else being equal, as the price of a good or service decreases the quantity demanded increases as and vice-versa, an inverse relationship. The law of demand is most certainly a testament to the law of diminishing marginal value.

People actually do say “I will buy 3 tomatoes, but not 4” or other such things.

[TruthAxe]

@djmclaughlin9999 There is no law of demand. Where did you get that crazy idea?

There is the Law of Price -- the winning bids of demand in the face of supply set the price.

[djmclaughlin9999]

@TruthAxe

Whether or not they recognize the fact and say it out loud, it is because they have a use for 3 tomatoes which they value more than the money they must pay for them. They don’t have a use for the fourth tomato which they value greater than the price, therefore, they don’t get it. In other words, the marginal value of the fourth tomato to the individual is less than that of the previous three that were actually purchased.

[TruthAxe]

@djmclaughlin9999 The whole of the purchase and sale is 3 tomatoes for $x. The seller of money values 3 $x for 3 tomatoes. The buyer of money values 3 tomatoes for $x.

There is no marginal value as is the bullshit put forth by academia. The buyer of tomatoes doesn't say "My satisfaction would be full at 3.25 tomatoes, but diminishes thereafter, therefore I won't by 4, but only 3."

Exchange happens at the scale of WHOLE economic quantities.

[djmclaughlin9999]

@TruthAxe

Maybe you are right. I suppose I should not use those crazy economics textbooks or listen to lectures by those crazy old PhD economists to learn economics and get such crazy ideas as the law of demand.

Thanks for schooling me. I feel much better now. But I am also a little confused now. Are those whole quantities you are talking about in ounces, pounds, hundred-weight or tons? Are they centimeters, inches, meters, yards, or miles?

[TruthAxe]

@djmclaughlin9999 Those crazy old PhDs are exactly that. There has been an amazing amount of mischief in the field of economics since JS Mill through Alfred Marshall and beyond. Those guys have been flat out wrong with nearly everything and every idea built on wrong ideas must too be wrong.

[djmclaughlin9999]

@TruthAxe

One thing that we do agree on is that the economics profession has done a lot of mischief. The fundamental problem with modern economics that I see, however, is that it displaces the various true laws of economics with mathematical models or buy into the massive Keynesian fallaciesto justify government intervention in the economy. Many influential PhD economists are dead wrong, but there are others who still understand and teach real economics, which includes the law of demand.

[djmclaughlin9999]

@TruthAxe

As far as the law of demand goes, it is supported by logic, every-day observation and by empirical evidence. I would be interested to see a convincing refutation of it. That would be a true learning experience for me.

[TruthAxe]

@djmclaughlin9999 You wrote, "The law of demand ... that, everything else being equal, as the price of a good or service decreases the quantity demanded increases as and vice-versa. "

Yet, there are cases where demand is inelastic. Hence, it's not a law. A law is true for all cases, e.g., gravity.

The Law of Prices holds true, always, even under market regulation, subsidy, taxation. The winning bids of demand in the face of supply always set the price -- Law of Prices.

[djmclaughlin9999]

@TruthAxe Is a bag of 4 tomatoes weighing 2.35 pounds at $1.75 per pound the whole quantity or is the bag of 10 tomatoes weighing 6.87 pounds at $1.75 per pound the whole quantity. Is the scoop of almonds at the bulk food store weighing 1.1 pounds the whole quantity or the 3 pound bag of almonds at Sam’s club the whole quantity? Is the half truckload of asphalt I pay for to repair my driveway the whole quantity or will I have to buy the whole truckload, because that is the whole quantity?

[TruthAxe]

@djmclaughlin9999 Are you buying fractional tomatoes, just the extra slice that maximizes your marginal utility? HA HA HA

[djmclaughlin9999]

@TruthAxe

i have at least once purchased a fractional tomato. A restaurant, i can't remember where, charged for extra toppings, such as a slice of tomato (fractional tomato) on a hamburger. Whatever unit or fractional unit you buy is the whole unit. You pay the price for whatever you get. The reason you don't buy more than you do is because you don't value the greater quantity more than the what you have to trade to get it. The marginal value of subsequent units or fractional units is less.

[TruthAxe]

@djmclaughlin9999 When charging by the slice, each slice of tomato is the whole quantity to purchase.

[natdavi]

@djmclaughlin9999 how big is the truck?

[djmclaughlin9999]

@natdavi

Good question. It could be a pickup truck or a tractor-trailer load. The point is that however much you buy, whatever units are used, it is the whole quantity. What you give is related to whatever you get. The reason that you don't buy more is that the next relevant quantity has lower marginal value for you, the buyer.

[djmclaughlin9999]

This economics stuff is really confusing. I hope you can clear it up for me.

[djmclaughlin9999]

@TruthAxe A can of peas sells for $1.00 one day and $.50 the next day. What is it’s value? Only what potential buyers attach to it. By lowering the price, the seller is likely to bring the marginal price below the threshold valuation for more people. It is called a sale or discount.

[TruthAxe]

@djmclaughlin9999 First off, it's called 'purchase and sale'. Second, owing to the law of prices, the price is what it is. It's not at "discount". That's marketing illusion. The only issue is whether the peas seller can cover costs to continue offering peas or is that seller going to get put to ruin.

If someone buys peas at $.50, he sells money and buys peas. The value is 50 cents for one can peas. It's a ratio.

[djmclaughlin9999]

@TruthAxe It is still subjective, and both people value differently. The change in circumstances, however, changes the subjective valuation of the marginal unit. That is what marginalism is about.

[djmclaughlin9999]

@TruthAxe I think I understand the real issue here. You have equated value with price. Value, however, is non-monetary. It is an internal prioritization of wants and needs, based on circumstances at any given moment. When you are in a hammock, lying comfortably in the shade, and the phone rings, you must answer the question: do I value the potential gain from the phone call more than I value the comfort of the hammock.

[TruthAxe]

You amuse @djmclaughlin9999. You need to get someone to teach you reading comp skills. I've not equated value with price. Value arises only from exchange. No exchange, no value. 'Value' has precise meaning in economics.

There's no internal "prioritization" ongoing and even if so, such talk is IRRELEVANT to economics. Go to psychology or marketing if that's your bag.

You've conflated 'want to receive' with 'value' in your hammock example.

[Vnntbls]

@TruthAxe

Perhaps you could provide some literature into this notion. It seems you might be a bit confused on what marginalism entails if you think "Fractional pieces and those on the margin" is all that relevant. Marginalism is about the decision matrix that occurs in deciding to take an additional unit of a good, and subsequent substitution effects and budget constraints.

[TruthAxe]

You amuse, @Vnntbls. Merely saying "you might be a bit confused ..." doesn't make it so. That's called ad hominem by innuendo.

For the good people reading these comments, perhaps you ought to demonstrate if you know what marginalism is.

[AshillaBeige]

This guy must have done something really special if the Nobel econ folks picked him over their usual crony capitalist and/or progressive favourites.

[NecxZhor9]

inflating out of it? Oh dear

[callmestranger1]

The monarchic and economic allegorists reneged on their duty to specifically define the symbols of their stories. Had they given the specificity of their earth-system-variables it would reduce the time to decipher and argue the models. I call for a movement towards better and more complex political socio-economic models.

[1Liberalis]

Proving someone else is wrong doesn't demonstrate you're right, just because "general equilibrium economics" is wrong doesn't show that "experimental economics" is right. I doubt Hayek would approve of this so called "experimental economics", for an actual analysis of the work done by this man and his style of "economics" as opposed to a personal interview and a few soundbites of what he does read this mises.org/daily/1082 and mises.org/daily/1409/Experimen­tal-Economics-Indeed

[mikekrentz]

@1Liberalis

i was just about to comment with that same link

[TheLegalImmigrant05]

@1Liberalis Yeah. Thanks for the links, great stuff.

This is another sign of how philosophically unserious these "professional libertarians" at Reason really are.

[NecxZhor9]

@TheLegalImmigrant05 If you find them philosophically unserious, it may just be because for one reason or another, you are not their target audience.

Youtube is not a good forum for in-depth philosophical discussions, so ReasonTV avoids them. The expectation is that those interested in such things are capable and willing to look further into the matter.

[TheLegalImmigrant05]

@NecxZhor9 Well, it's not that their product is good, just not good enough; I happen to think that their product is not so great. I heard these guys speak live multiple times, and their arguments are low quality. "Taxation is theft... yes, but not ALL taxation", etc. (What?? So what criteria do you apply to determine when it is and when it isn't? etc. - you can see where this is going.) Reason avoids these discussions because they don't like to have them, not because it's on YouTube.

[AshillaBeige]

@TheLegalImmigrant05 The folks at reason seem to follow the Milton Friedman brand of libertarianism ie consequentialist libertarianism. They're more practical. A lot of the hard line Mises types will go on and on about the philosophy, but they rarely ever put forth a plan to improve the real world. It's easy to be an intellectual or an armchair economics/poli sci buff. It's much harder to actually learn about policy and try to maximize liberty given THIS environment.

[AshillaBeige]

@TheLegalImmigrant05 And they're libertarians, not anarcho capitalists, which is what Mises was.

[TheLegalImmigrant05]

@AshillaBeige "And they're libertarians, not anarcho capitalists" - U mean"minarchists"? Anarcho capitalists ARE libertarians.

I think you'll agree that " to be practical" = to advocate for a well defined & achievable goal. I would argue that these guys are advocating for "more freedom" under "limited government", which is neither clearly defined (how much government is enough? why? etc.) nor achievable. Just look at how well the existence of the Constitution has held back the statist hordes.

[1Liberalis]

@AshillaBeige Mises was a Liberal or a "Minarchist" if you prefer, Murray Rothbard was an Anarcho Capitalist, Mises was not.

[rockandrock44]

@1Liberalis

Ah, gotta love Mises Institute purists.

[1Liberalis]

@rockandrock44 What's that snide comment meant to mean? I believe experimental economics to be fallacious and I believe the articles I listed above give an outline as to why that is so. Rather than make a snide remark about the man or the video I simply provided an opportunity for people to learn something about what's being discused in the video in a critical manner. I think this can be of benefit to people by helping them understand how the world actually works, something wrong with that?

[rockandrock44]

@1Liberalis

The problem is that the pure a priori axiomatic approach Austrian economics has taken is the reason why it's laughed at by 95% of the economics profession. The work of Smith has advanced ideas about liberty, much more than the pure deductivist approach ever could.

[rumco]

@rockandrock44 Adam Smith and his labour theory of value? He indeed advanced the cause of liberty when Marxists took over his pseudo-theory.

[TruthAxe]

@rumco Rightly, it ought to be called the Theory of Labor Value rather than the always misspoken Labor Theory of Value. Either way it's wrong.

Value arises from exchange and mutual exchange arises from the greater want to possess what the other guy has. Labor has nothing to do with it.

[1Liberalis]

@rockandrock44 Praxeology might not be the zeitgeist of our times but do you want to know how the world actually works or to adhere to the academic fad of the moment? If there's any substance to what you say then watch this and tell me where he goes wrong youtube.com/watch?v=BojfG6fmYE­U is there anything he says that's wrong? If so, what and why? I'll finish by quoting Gandhi "first they ignore you, then they laugh at you, then they fight you, then you win".

[natdavi]

@1Liberalis or you can just study experimental economics yourself and make your own decision.

[1Liberalis]

@natdavi I don't really get how your comment makes sense in response to what I've said but I have studied what "experimental economics" is about, that's why I reject it so strongly.

[natdavi]

@1Liberalis sorry I meant that for someone else

[Vree0387]

@1Liberalis I'm generally fond of mises.org articles, but the one linked is overly-idealistic and misses the point of Smith's ideas. Smith explicitly states at the end of this video that he sees property rights as arising not from governments but from human nature, yet the article makes the unfounded assumption that Smith takes the opposite view. Smith's method may be experimental, but it demonstrates precisely what Hayek was saying about the pretense of knowledge in standard economic models.

[1Liberalis]

@Vree0387 The question of how property rights developed isn't an economics point, it's a historical point. As to what Smith said here he said it couldn't have originated from government but then he goes on to say that it then "gets into civil government". A more meaningful point from the articles would be something like "Smith openly casts doubt on the notion that reason is the main faculty that navigates human actions. For him the main driving force are emotions." Animal Spirits anyone?

[bms2070]

@1Liberalis neoclassical economists should be scared of 'experimental economics'. Economics will never be a true science until it can test its theories in the real world and see if they can be falsified. Proof by mathematization is not and never has been sufficient.

[1Liberalis]

@bms2070 Have you thought about working at Reason? because clearly you know nothing of economic methodology and nothing about philosophical theories of knowledge such as Praxeology, so you should fit in just fine.

[flynn2008]

Holy Cow, I could hear the sound of Mises and Hayek cheering on 16:00 on.

[elricmlbone]

This video confirms my belief in classical Liberalism and Austrian economics.

I recommend "Liberalism" by Mises, free download from Mises.org or buy it there or at Amazon

[theroilsoil]

Brilliant man --

The "recession" ended along time ago, and now we're dealing with an ever

worsening DEPRESSION - PERIOD.

The likelyhood of putting in place a solid infrastructure for job growth - in private industry - mainly for the middle-classs in the US, is next to nil.

Because of this fact, there will be no REAL SUSTAINABLE improvement in this country.

[58robbo]

this dude is 84! that's almost more impressive than his nobel prize!

[AnotherUserNamedPaul]

@58robbo Doesn't it seem like free-market economists remain lucid to the end?

[58robbo]

@AnotherUserNamedPaul that's because they don't have to lie, make up stories, spread fear and exaggerate achievements! we accept the world for what it is and we understand that life is laced with inherent risk. we have made peace with the reality that shit happens. command economists and leaders believe they hold all the answers and that they have the cure for the worlds ills. in just about every case their cures are worse than the disease